Negative FINANCE QUINTANA ROO

Negative FINANCE QUINTANA ROO

By: Miranda Gutiérrez Romamy

There is no intelligent ruler; if it were it would not be intelligent ruler.

President Enrique Peña Nieto and the governor Roberto Borge Angulo

THE ALERT Mexico Fitch Ratings in its latest report on the deteriorating credit profile of Quintana Roo, therefore, the government of Roberto Borge Angulo, would struggle to sustain the current debt by 14 thousand 968 million pesos.

According to a report by the body , " in the long run high risks expected in the debt sustainability " , which may further increase the probability of demand liabilities.

Information of the Secretariat of Finance and Public Credit (SHCP ) notes that Quintana Roo has affected 89.4 percent of federal contributions , which reduces their room for maneuver , being the third national entity which has committed resources to support debt state . The other states are: Ontario ( 100 percent) and Coahuila (90.2 percent).

Raiting Fitch explains that the coffers of the state government at the end of 2013 , recorded observations and negative ratings , which public finances and credit contributions that have not shown improvement in the last twelve months is explained.
Although the governor insisted on praising the economic policies implemented at the federal level , the financial situation at home is not right.

In a statement, the international rating agency said that Quintana Roo remain on Watch Negative due to the risk that prevails in the coming months, most of the above financing may be accelerated and / or declared in default.



The corporation owes :
- Banobras 11 contract for an initial amount of MXN4 , 000 million , balance at March 31, 2014 MXN3 , 988900000 , 'BBB + (mex ) vraq ';
- HSBC 11 MXN1 initial $ 500 million balance MXN1, 471200000 , 'BBB + (mex ) vraq ';
- Interactions 11 MXN1 initial amount , 434.4 million , balance MXN1, 426900000 , 'BBB + (mex ) vraq ';
- Multiva 11 MXN1 initial amount , 543.5 million , balance MXN1, 526 million , rated ' BBB + (mex ) vraq ';
- Banorte 11 MXN2 initial $ 500 million balance MXN2, 238400000 , 'BBB + (mex ) vraq ';
- Multiva 13 MXN2 initial $ 500 million balance MXN2 500 million , rated ' BBB + (mex ) vraq ';
- Interactions 13 MXN2 initial $ 484 million , balance MXN2, 463400000 , 'BBB + (mex ) vraq ' .

Ratins Fitch noted that all creditor banks have granted waivers releasing the breach of certain obligations to be assumed by the State .

However, states that " some of these waivers are valid for a period of less than three months from this date time , so only mitigate the risk of acceleration and / or early termination of credit temporarily ."

In this regard, Fitch said have knowledge and will follow up the negotiations being carried out by the State and the creditor banks in order to harmonize the obligations mainly limited debt levels both short and long term , and which comply with the current financial reality of Quintana Roo, by holding addenda to the respective contracts.

GOING ON THE ROAD TO GROWTH , SAYS we Borge

However, Roberto Borge Angulo, through the Unit spokesman , issued a statement in which it was dedicated to praising the " great reforms " promoted by President Enrique Peña Nieto because "they have a Mexico on the path of economic growth."

Expressing his support for the economic policies of the Government of the Republic , said Borge know seeks to consolidate the national growth trend .

He stressed that " gradually the resistance found structural reforms are exceeded and agreed with the Finance Minister Luis Videgaray in this year's economic growth will be 2.7 %, which shows that the country is on the right track and its economy is not stagnant , "although this percentage represents a decrease of expected economic projections for 2014 and has caught alerts in various sectors of the economy and talk of a recession in the country.

However, the Governor repeated the evasive speech Finance Minister to justify " is a 2.7 % higher growth rate for this year is forecast for the U.S., Europe and many countries in Latin America."

Roberto Borge said , in fact , despite the international environment of slower growth , the Mexican economy grew in the first quarter of 2014 ( 1.8 % ) over the same period of 2013 ( 1.1 %).

" There are many indicators of strengthening our economy , 'he said . Industrial production, automotive, job growth , increased remittances, are factors in the immediate term will have a positive impact on the economy . "

FITCH RATINGS BUT NOT REMOVE THE FINGER ON LINE FINANCE QR

However, despite the optimism of the Governor on the progress of the national economy , according to the report of the agency, to December 31, 2013 , Quintana Roo presented deficit balances were however lower than the previous year .

"It is important to note that the State is implementing various measures to increase disposable income and reduce operating expenses , which could improve the financial flexibility of the company from this year ," noted Fitch Ratings.

During the first quarter 2014 , he said, he began to see the results of these strategies , reflected in a positive balance .

Fitch said it was positive the implementation of control programs and control of expenditure, and setting limits on the debt, and will track the evolution of both the finances and policies to implement the State in these matters.

And he explained :

"By March 31, 2014 , direct long-term debt amounted to MXN15 Quintana Roo , 898.7 million , while the short-term debt to 648 million pesos ( MXN2 688 million at March 31, 2013 ) ; in 2013 the long-term debt represented 1.94 times ( x ) the income ( or ordinary income tax OFR ), while direct service long-term debt was equivalent to 16.7 % of OFR . With the start of depreciation in the vast majority of the loans, the debt service is expected to rise on average MXN1, 700 million for 2014-2016 . "

Among the factors underlying credit quality of Quintana Roo , emphasizes its own income structure , comparing favorably with the median of the Group of Qualified by Fitch ; favorable economic outlook to support tourism ; and indicators of marginalization and social welfare very favorable when compared with the national average. }

Moreover, among the constraints include the high operating expense structure , a situation that limits the generation of free cash in the company and has caused high financial deficits in recent years ; high levels of leverage and debt sustainability ; and weak liquidity position, characterized by a high liabilities .

According to the methodology of Fitch , the rating of the specific funding is linked to changes in the credit quality of the entity.

At March 31, 2014 , all loans recorded adequate coverage of debt service , but watch negative reflects the pressure that could exert some clauses with obligations to the State to credit agreements .

Fitch Ratings stated that if addenda in which completely disable the risk of acceleration and / or early maturity of the loans were made, the observation of negative ratings of the state and its financing would retire .

However the credit outlook could remain negative, if state finances remain under pressure , which could lead to an increase in current liabilities and a new debt restructuring .

" This together with the record of similar financial deficits or greater than those observed in recent years , could generate a new setting to the downgrade of the State ," he warns .

Conversely , a decrease in operating expenses and / or increasing disposable incomes , generate adequate and stable levels of domestic savings , causing a decrease in the levels of current liabilities and the recovery of the box, it could improve the credit rating Quintana Roo says Fitch Ratings